Sharekhan has given Buy recommendation for AU Small Finance Bank with a target price of Rs. 1425 in its research report issued on Mar 11, 2022

Sharekhan’s research report on AU Small Finance Bank

In its analyst meet, AU Small Finance Bank highlighted its improved digital capabilities that helping it to deliver a superior customer performance and thus driving business growth. Earlier, the bank had formalised 10 strategic business units (SBUs) with independent leadership and which will operate as separate profit centres, driving growth. In the meet, the bank primarily focused on its two critical SBUs formed – Wheels and home loans. These two segments, which constitute ~37% and ~5% of the AUM respectively are key focus areas. The bank also reiterated a strong collection efficiency and credit capabilities in creating business assets. In the vehicle finance business, higher fuel prices and supply bottlenecks are near-term challenges. However, long-term growth levers remain intact with growth opportunities through expansion in new markets and customers. Though home loans contribute minimally to the AUM, it is one of the fast growing segments. At CMP, AUSFB is available at 4.2x/3.4x its FY2023E/FY2024E BPVS.

Outlook

The stock price has corrected by 16% from highs of Rs. 1,421 which offers a good buying opportunity from the lower levels. We maintain Buy on the stock with an unchanged PT of Rs. 1,425.

More Info

At 13:38 hrs AU Small Finance Bank was quoting at Rs 1,125.00, down Rs 67.50, or 5.66 percent.

It has touched an intraday high of Rs 1,203.00 and an intraday low of Rs 1,075.85.

It was trading with volumes of 64,257 shares, compared to its thirty day average of 45,654 shares, an increase of 40.75 percent.

In the previous trading session, the share closed up 2.66 percent or Rs 30.90 at Rs 1,192.50.

The share touched its 52-week high Rs 1,420.65 and 52-week low Rs 910.00 on 03 February, 2022 and 05 May, 2021, respectively.

Currently, it is trading 20.81 percent below its 52-week high and 23.63 percent above its 52-week low.

Market capitalisation stands at Rs 35,310.21 crore.

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